Buying PXD call contracts.

Pioneer Natural Resources (PXD) is a profitable oil and gas company with a great dividend.

The stock pulled back as oil prices stabilized this summer. But PXD continues to generate reliable profits and trades for a cheap price compared to earnings.

This morning, the Bank of America research team downgraded the stock, but shares have moved higher. That’s a great sign of strength and gives me confidence that PXD is set to move back higher.

It wouldn’t be surprising to see PXD rebound from its current level near $212 to previous highs above $280.

Buying in-the-money call contracts gives us exposure to the stock if this rebound happens. And it helps to protect our capital if PXD continues to pull back.